Philippine Airlines (PAL) is further expanding its international operation as it grows its fleet and improves utilisation of its existing widebody aircraft. PAL’s international network will exceed 40 destinations in Jan-2016 compared to only 25 in Jan-2013.
PAL is adding five international destinations over the next two months, including two destinations in the Middle East and three in Australasia. Long haul growth will resume in Mar-2016 with the launch of services from Cebu to Los Angeles, which will be PAL’s first widebody international route from Cebu.
Opportunities to further grow the long haul operation will come in late 2016 as PAL adds two more 777-300ERs. The expected acquisition of a new higher gross weight version of the A350-900 will be used to upgrade New York to non-stops in 2017 and potentially be deployed to upgrade Toronto to non-stop and launch a fourth mainland US destination.
Philippine Airlines currently operates a fleet of 59 aircraft, including 32 A320 family aircraft and 27 widebodies, across an international network of 36 destinations. PAL also has a small domestic operation but the group’s domestic services are now primarily operated by full service regional carrier PAL Express, which has a fleet of eight single class A320s and nine Dash 8 turboprops.
PAL carried 773,000 domestic passengers in 1H2015 compared to 2.5 million for PAL Express and 5.8 million for market leader Cebu Pacific, according to Philippine CAB data. The Cebu Pacific Group carried 6.8 million domestic passengers when including subsidiary Cebgo compared to a combined 3.3 million for the PAL Group and 1.3 million for the AirAsia Group (includes AirAsia Zest and Philippines AirAsia).
This report focuses on PAL’s international network and expansion. A separate upcoming report will look at the PAL Group’s domestic expansion and the overall Philippine domestic market.
PAL carried 2.9 million international passengers in 1H2015 compared to 1.9 million for Cebu Pacific and 357,000 for AirAsia’s Philippine affiliates. PAL Express carried 39,000 international passengers in 1H2015 but is now purely a domestic carrier as its only international route, Manila-Dubai, was transferred to PAL in Mar-2015.
PAL is on track to carry about 6 million international passengers in 2015, a 50% increase compared to 2012. PAL recorded 5% international passenger growth in 2013, ending three years of flat traffic, and growth accelerated to 20% in 2014.
PAL’s share of the total Philippine international market (including foreign carriers) has increased from 23.6% in 2012 to 27.7% in 1H2015. But its current market share is roughly even with 2010 levels and is still below the 30% share captured in 2006 and 2007.
Philippine Airlines international passenger traffic and share of total international passengers: 2006 to 1H2015
|Year||Passenger traffic (millions)||Passenger share|
Source: CAPA - Centre for Aviation & Philippine CAB
For the second consecutive year PAL will likely end 2015 with annual international passenger growth of about 20%. The Philippine CAB has not yet reported traffic figures for 3Q2015 but PAL reported 17% growth in international passenger traffic in Jul-2015 to 464,000. This represents a two year growth figure of 36% compared to the 341,000 international passengers carried in Jul-2013.
Philippine Airlines monthly international passenger traffic: Jan-2008 to Jul-2015
Source: CAPA – Centre for Aviation and AAPA
ASK growth has been even faster – including almost 30% in 2014 – as PAL has rapidly expanded its medium and long haul network.
PAL has added six destinations outside Asia-Pacific since late 2013, including Abu Dhabi, Dammam, Dubai, London, New York and Riyadh. Its network outside Asia-Pacific previously only consisted of five destinations in North America – Honolulu, Los Angeles, San Francisco, Toronto and Vancouver with Toronto having been added in late 2012.
PAL is adding two more Middle Eastern destination in early Jan-2016 as it launches services to Jeddah and Kuwait. This will increase PAL’s network in the Middle East to six destinations, compared to zero in 3Q2013, and expand its non-Asia Pacific network from 11 to 13 destinations. But its long haul capacity will only increase slightly as PAL plans to serve both new markets as tags to Dubai.
PAL currently serves Dubai with five weekly A330-300 frequencies. From 1-Jan-2015 Dubai will be increased to daily but with four weekly Manila-Dubai-Kuwait A330-300 frequencies and three weekly Manila-Dubai-Jeddah frequencies.
PAL currently has 25 destinations within Asia-Pacific including five in Australasia. PAL’s Australasia network will grow to eight destinations in Dec-2015, giving it 28 in Asia-Pacific, as services are being launched to Cairns, Auckland and Port Moresby.
Philippine Airlines international network summary: Jan-2016 vs Nov-2015 and Nov-2012
Note: based on schedules for mid Jan-2016, mid Nov-2015 and mid-Nov-2012
Source: CAPA – Centre for Aviation & OAG
Cairns will become PAL’s fifth destination in Australia after Brisbane, Darwin, Melbourne and Sydney, while Auckland will be its first destination in New Zealand and Port Moresby its first destination in Papua New Guinea. PAL also serves Guam, a US territory in the South Pacific which is considered part of the Australasia.
PAL is initially operating four weekly A320 flights on a Manila-Cairns-Auckland routing from 1-Dec-2015 while Port Moresby is initially being served with three weekly A320 turnaround flights from 18-Dec-2015. PAL currently deploys A330s to Melbourne (thrice weekly) and Sydney (daily) while Darwin and Brisbane are coupled with three times weekly A320 service. PAL also briefly served Perth via Darwin in 2013 using A320s but quickly dropped the route while retaining Manila-Darwin-Brisbane. Guam is currently served by PAL with a daily A321 flight.
PAL will deploy about 6,000 weekly one-way seats to the Southwest Pacific in early 2016, nearly double the capacity compared to early 2014.
Philippine Airlines capacity to Southwest Pacific (one-way seats per week): Sep-2011 to May-2016
Source: CAPA – Centre for Aviation & OAG
PAL has competition on only one of its existing Australasia routes, Manila-Sydney, which is also served by Cebu Pacific and Qantas. PAL will also be the only carrier offering direct flights from Manila to Auckland or Cairns but will compete to Port Moresby with Air Niugini, which currently operates only one weekly flight to Manila.
PAL will be only the third airline from outside Australasia to serve Cairns, joining Cathay Pacific and SilkAir. In Port Moresby, PAL will be the only airline from outside Australasia although Air Niugini’s network includes four destinations outside the region (Bali, Manila, Singapore and Tokyo).
PAL will rely heavily on sixth freedom traffic in both these markets as well as fifth freedom traffic on the Cairns-Auckland sector. Port Moresby offers high yielding business traffic while Cairns is primarily a leisure market.
But PAL faces the prospect of new competition from Cebu Pacific to Guam and potentially Melbourne. Cebu Pacific plans to launch services to Guam in 2016 with A320s and has been looking at entering the Melbourne market since a new air service agreement was forged between Australia and the Philippines in late Apr-2015. Prior to the new agreement Cebu Pacific was capped at five weekly A330-300 flights, which it uses for Manila-Sydney.
Cebu Pacific is now analysing the Australian market to see if it can accommodate Melbourne flights without impacting its performance in Sydney as some of its Sydney passengers self-connect to Melbourne and other Australian destinations.
Cebu Pacific has achieved relatively high load factors to Sydney since launching the route in Sep-2014 and has been able to grow the overall market by stimulating demand. According to Australia BITRE data, total passenger traffic between Manila and Sydney was up 67% in the 12 months ending 31-Aug-2015 compared to the same period the prior year.
Manila-Sydney passenger traffic: 12 months ending Aug-2015 vs 12 months ending Aug-2014
Source: Cebu Pacific citing Australia BITRE
But the Manila-Sydney route is not yet profitable for Cebu Pacific due to low yields. PAL also has experienced a significant erosion in yields in the Sydney market, which has made the Manila-Sydney route extremely challenging. PAL passenger traffic to Sydney grew by 17% in the first year Cebu Pacific was in the market but it added capacity in response to the new competition, which likely exacerbated the pressure on yields.
PAL would probably be similarly impacted if Cebu Pacific launches Melbourne, particularly as Melbourne-Manila is a much smaller local market than Melbourne-Sydney. PAL also faces the prospect of new competition from Cebu Pacific on Manila-Honolulu, which the LCC plans to launch within the next few months with two weekly A330-300 flights.
Honolulu will be Cebu’s sixth medium/long haul destination, joining Doha, Dubai, Kuwait, Riyadh and Sydney. PAL also competes with Cebu Pacific in the Dubai and Riyadh markets.
Manila-Dubai has been a challenging market for PAL since the group launched the route two years ago – at about the same time as Cebu Pacific. Manila-Dubai is now profitable for Cebu Pacific, which reported a 3Q2015 load factor of 87.5% load factor for Manila-Dubai, while it is still loss making for PAL.
PAL is hoping the new tag to Kuwait and Jeddah will improve its performance in the Dubai market. PAL will have uplift rights from Dubai to Kuwait and Jeddah which it intends to utilise. It is also hoping to carry significant traffic from Manila through to Kuwait and Jeddah, enabling it to improve load factors on Manila-Dubai.
But in Kuwait PAL will have to compete against Cebu Pacific, which serves Manila-Kuwait with three weekly non-stop flights. Cebu Pacific is now the only carrier with non-stops in this market as Kuwait Airways serves Manila via Bangkok.
New Cebu Pacific competition to the Middle East and Australia as well as on some routes within Asia, in particular Japan, has clearly impacted PAL’s international operation. Rapid capacity expansion also has had an impact as it takes time for new long haul routes to mature.
PAL’s international load factor slipped below 70% in Jun-2015 and Jul-2015 (the last two months of available data). The 66.8% figure from Jun-2015 marked the lowest monthly international load factor for PAL since 2012.
While June and July are traditionally weak months, PAL’s 2015 load factor for these months was still 4.1ppt and 1.4ppt below 2014 levels. Through the first seven months of 2015 PAL’s international load factor was below already low 2014 levels six months and about flat one month.
Philippine Airlines monthly international load factor: Jan-2008 to Jul-2015
Source: CAPA – Centre for Aviation and AAPA
But PAL has been profitable over the last year, boosted by low fuel prices and improving conditions in some of its markets. PAL Holdings recently reported a PHP6.108 billion (USD133 million) net profit for the first nine months of 2015 compared to a net profit of PHP238 million (USD5.4 million) the first nine months of 2014.
For 3Q2015 the company generated a PHP248 million (USD5.4 million) net profit compared to a net loss of PHP322 million (USD7.4 million) in 3Q2014. (Note: PAL Holdings includes non-airline subsidiaries but does not include PAL Express.)
Passenger revenues were up 13% in the first nine months of 2015 to PHP68.4billion (USD1.518 billion), driven by the increase in international passenger traffic. PAL Holdings posted a respectable 6.8% operating profit margin for this period.
PAL has historically generated most of its profits on North American routes, where it faces relatively limited competition. PAL is planning to expand capacity to mainland North America over the next few years, a sensible move as competition will likely continue intensifying to the Middle East, Australia and, soon, Hawaii.
PAL also has looked at expanding in Europe but has put new destinations in continental Europe on the back burner, another sensible move given the intense competition to Europe from Gulf carriers. In Europe PAL is instead focusing on improving its performance in London, which it now serves with five weekly A340-300 flights.
PAL has selected Cebu-Los Angeles as its next long haul route, which it plans to launch with three weekly A340-300 flights on 15-Mar-2016. PAL currently serves Los Angeles from Manila with 11 weekly flights, including seven with 777-300ERs and four with A340-300s.
PAL also currently serves Manila-San Francisco with daily 777-300ER flights and three additional A340-300 weekly frequencies during peak periods. Vancouver is served with 10 weekly flights, including four weekly 777-300ER frequencies which continue to New York, three 777-300ER frequencies which continue to Toronto and three A340-300 frequencies which turn around at Vancouver. Honolulu is served with five weekly A330-300 frequencies.
Los Angeles will be the first long haul destination for PAL from its secondary hub at Cebu. PAL currently only has four international flights from Cebu – Nagoya, Osaka, Seoul and Tokyo Narita – all of which are served with A321s.
PAL is building up its hub at Cebu due in part to congestion at Manila, where a lack of slots precludes additional flights. The group has launched or resumed several domestic routes from Cebu in 2015, which will help feed the new flights to Los Angeles. More domestic expansion at Cebu is planned for 2016 and will be analysed as part of the next report in this series.
But PAL also sees strong local demand for Cebu-Los Angeles and is hoping the new non-stops will win over passengers who are now flying one-stop options from competitors. While PAL offers Cebu-Los Angeles passengers a connection in Manila most passengers currently travel via Seoul on Korean Air or via Hong Kong on Cathay Pacific.
PAL is able to add Cebu-Los Angeles using its existing long haul fleet as its six A340-300s are not currently fully utilised. PAL will also have an opportunity to add long haul capacity in late 2016 as two additional 777-300ERs are delivered.
PAL currently has six 777-300ERs and committed in Jun-2015 for two additional leased aircraft which will be delivered in 4Q2015. For now PAL plans to use these two aircraft for a combination of growth and replacement. While none of the A340-300s are expected to be phased out as soon as the additional 777-300ERs are placed into service there will likely be a gradual drop in utilisation for the A340 fleet.
PAL intends to keep operating its six A340-300s, which were added in 2013 and early 2014, until the engines require overhaul. This is logical given PAL only recently invested in acquiring the aircraft and the current low price of fuel. A spike in fuel prices could prompt PAL to accelerate the phase out of A340s and potentially suspend Cebu-Los Angeles.
The A340-300s are now slated to be phased out as new generation widebody aircraft are delivered. PAL is close to committing to at least six A350-900s for delivery from 2017. A formal announcement is expected by the end of 2015.
PAL is looking to acquire a new high gross weight (HGW) version of the A350-900 which is available from 2017 and will enable non-stop Manila-New York flights in both directions without payload limitations. Airbus has informed PAL that it does not need the recently launched A350-900ULR, which will be available from 2018 and has been ordered by Singapore Airlines for non-stops to the US.
Trans-Pacific flights from Manila are about three hours shorter than flights from Singapore. But flights from eastern North America to Manila are still slightly too long for the current version of the A350-900 or the 777-300ER.
PAL is also looking at using A350-900 HGW aircraft to potentially upgrade Toronto to non-stop and launch a fourth destination in the mainland US. Chicago is the most likely new destination for the A350-900 HGW.
PAL has also been evaluating other potential US markets in both the east and west coasts. New destinations in the western US can be launched using the existing widebody fleet, potentially as early as late 2016 as the two additional 777-300ERs are delivered. PAL previously served Las Vegas and at one point was considering San Diego, which has a large Filipino community.
A fleet of eight 777-300ERs and six A350-900s will enable modest growth of the long haul network with a focus on North America. Even if PAL ultimately opts for a few more A350s the long haul growth should be manageable.
PAL is likely to remain for at least the medium-term the only non-stop operator between Philippines and continental North America, which has a large a loyal Filipino population. PAL is fortunate to only have to compete against North Asian carriers in the Philippines-North America market as one-stops via the Middle East is a much longer option.
PAL does not have any medium haul widebody aircraft on order but has room to grow using its existing A330-300 fleet. The current fleet of 15 A330s should also be sufficient given competition is expected to further intensify in all the international markets the type is currently used – the Middle East, Australia, North Asia and Hawaii.
Philippine Airlines fleet summary: as of 20-Nov-2015
|Aircraft||In Service||On Order*|
Note: *orders includes commitments with leasing companies
Source: CAPA Fleet Database
As CAPA has previously highlighted, PAL was significantly under-utilising its A330s in 2014 as the last batch of aircraft were delivered. But the utilisation rate has improved as PAL has expanded in the Middle East and replaced A340s with A330s in some medium haul markets. PAL also has been planning a reconfiguration project for the seven A330s which are in 414-seat all economy configuration.
See related reports:
PAL has delayed the retrofit of the all economy A330s until 2017. But ultimately a fleet of 15 dual class A330s, all of which are currently less than two and a half years old, should reinforce its position as a premium carrier.
The decision to go with single class aircraft was made by PAL’s previous management and ownership team, which responded to Cebu’s decision to establish a widebody operation. But PAL is ill-equipped to compete with Cebu Pacific at the bottom end of the market. There is still room for a full service carrier in the Philippines, but it is critical for PAL to stay modest and not pursue overly ambitious expansion.
PAL has a much larger narrowbody order with commitments for five additional A321ceos for delivery in 2016 and for 30 A321neos for delivery from 2017. But PAL can manage this order to keep expansion at a rational pace.
PAL plans to return two of its older model A320s in 2016, resulting in net growth of three aircraft as the last five A321ceos are delivered. PAL plans to use the three growth A320 family aircraft to pursue a mix of domestic and regional international expansion.
With the 30 A321neos PAL will have the opportunity to replace and up-gauge its remaining A320s as well as open new medium haul routes which are too long for current A320/A321ceos. As CAPA has previously outlined, PAL is looking at converting some of its A321neo orders to A321LRs and using the type to launch new non-stops to destinations such as Brisbane (now served via Darwin) and Perth (which had been served via Darwin before it was dropped in 2013).
PAL still has opportunities in the regional international market within Asia Pacific despite the intensifying LCC competition.
Smaller niche markets such as Cairns, Port Moresby and Perth do not have the volume to support LCCs but can be potentially lucrative for a nimble network carrier such as PAL.
However PAL will need to need to be relatively conservative and cautious as it continues its regional expansion.
The international expansion PAL has pursued over the couple of years was extremely ambitious. It is rare to see such an established flag carrier – PAL is over 70 years old – increase the size of its international network by 70% in three years.
PAL is extremely fortunate to have oil prices plummeted just as it was expanding rapidly, particularly given its acquisition of A340s. But PAL cannot bank on oil prices remaining at its current level.
Low fuel prices and improved profitability give PAL an opportunity to take a pause to let all the international capacity added in recent years be fully absorbed. Now is the time to pursue relatively modest expansion and plan for a possible future with higher oil prices.
PAL is on the right track with the acquisition of six A350-900s to replace its A340-300s and avoiding the temptation to expand the widebody fleet beyond 30 aircraft.
International Airlines Group (IAG) CEO Willie Walsh is open to further airline acquisitions and low-cost carrier partnerships, he told delegates at the UK Aviation Conference 2015. Speaking at the Airport Operators’ Association (AOA) event in London, Walsh said he has “no problem” working with budget carriers, as long as customers want it and the commercial terms are right. He confirmed IAG has been approached by Irish low-cost carr
ier Ryanair, but said he was equally ...
News 24-Nov-2015 3:46 PM
- Atlanta-Milan Malpensa: 767-400ER to replace 767-300ER on three times weekly requency, effective 01-Aug-2016;
- Atlanta-Barcelona: 767-400ER to replace A330-300 on daily frequency from 06-Sep-2016;
- Atlanta-Venice: 767-400ER to replace 767-300ER up to once daily from 02-Jun-2016;
- New York JFK-Prague: 767-400ER to replace 767-300ER on daily frequency from 26-May-2016;
- Pharmaceuticals / The Company recorded 18.8 million in extraordinary income.
- The pharmaceutical grew 53.5% more in the United States and barely 0.1% in Europe.
- The dermatology division grew by 21.6%, representing 42.5% of revenues.
The profit of pharmaceutical Almirall soared 70.9% to 73.3 million euros in the first nine months of the year. The increase was mainly due to the evolution of the dermatology division in the United States and 18.8 million in extraordinary income.
The Gallardo family company achieved a revenue increase of 1.6% to 595.3 million. The operating result showed an increase of 13% to 172.6 million.
The dermatology division, the company’s main commitment, was the only division to grow.
It recorded an increase in turnover of 21.6%. Currently it already accounts for 42.5% of the
group’s sales. The increase occurred mainly in the US market, helped by the euro-dollar exchange rate, and was 53.5%.
Meanwhile, in Europe growth was almost testimonial, only 0.1%. This division sells more in the US than in the Old Continent. Likewise, the company also recorded an increase in extraordinary income. This is 18.8 million from the completion of a milestone associated with Duaklir, a drug from its former respiratory business, transferred to AstraZeneca in the summer of 2014. Almirall expects to close the year with revenues of between 740 and 770 million euros. The EBIT will be between 100 and 130 million. On the Stock Exchange, the pharmaceutical yesterday fell 2.34% to 17.1 euros per share.
Source: expansion/ 2015-11-10
Posted by flytobarcelona.org
Barcelona Air Route Development Committee
promotes Barcelona Airport intercontinental flights
The Catalan pharmaceutical strengthens its position in Latin America with the opening of subsidiaries in Peru and Colombia. The company, owned by the Puig group and Esteve laboratories, sets foot in the United States.
The laboratory Isdin closed 2014 with an increase in turnover of 10.4% to 148.9 million euros, and profit soared 68.3% to 10.1 million euros. The company, owned equally by Puig and Esteve, has left behind the years of recession and is beginning to reap the fruits of its commitment to innovation and internationalisation. The Catalan pharmaceutical strengthened its presence in Latin America, its largest foreign market, by opening subsidiaries in Peru and Colombia. The company also made a new commitment. It has opened business in the United States, where great success is expected as of 2016.
The laboratory is once again showing double digit growth, with a turnover of 148.9 million euros. The firm overcame the recession by committing to innovation and internationalisation Laboratorios Isdin has entered the United States and is growing in Latin America as profit grows 68%. The joint venture between Puig and Esteve is once again showing double digit growth after the crisis. It closed 2014 with sales of 148.9 million euros and a profit of 10.1 million.
Isdin Laboratories, the dermatology business of Puig group and Esteve laboratories, is going through a sweet stage. After leaving behind the years of recession, the business took off in 2014 with double digit growth and its profit soared 68.3% to 10.1 million euros. This boom, explained its CEO, Juan Naya, is due to two factors: investment in innovation and internationalisation.
Isdin closed 2014 with a turnover of 148.9 million euros, up 10.4%. This is a strong growth, especially when compared to the pharmaceutical sector. Naya recognises that the company has a better performance owing to the weight of medicalised cosmetics. “These represent 75%, while the other 25% are pharmaceuticals", said the executive.
- International passengers increased by 9.1%.
- 25,349 take-offs and landings were operated, representing an increase of
1% compared to the same month of the previous year.
- Freight transport increased by 15.3%, with over 11,070 tonnes.
Barcelona-El Prat Airport closed its best October with 3,621,777 passengers, 7.5% more than the same month last year. In the year to date 34,317,582 users were reached, representing an increase of 5% compared to the data recorded in the same period of 2014.
Over the last month, the airport recorded 2,684,881 international passengers with a growth of 9.1%, while domestic passenger flights kept their line of growth in recent months with an increase of 3.3% in October and 935,170 users.
Meanwhile, passengers on domestic flights maintained the line of growth in recent months with a 3.3% increase in October and 935,170 users. In the year to date, on 31 October, the Airport recorded 9,002,209 passengers, an increase of 2.5%.
According to market, the greatest passenger growth that occurred last month was on flights to other continents. Latin America is the country with the greatest increase, with 47.5%, followed by North America with 21%, the Middle East with 18.8% and Asia with 15%.
As regards operations during the last month, Barcelona-El Prat Airport recorded 25,349 take-offs and landings, an increase of 1% compared to October 2014. In the year to date, there have been a total of 248,358 aircraft movements, representing an increase of 1.2%.
Finally, with regard to freight, last month 11,070 tonnes was moved, which translates into an increase of 15.3% over the same period of the previous year. Air cargo on non-EU international routes was the fastest growing with 30.6%. In the period between January and October 2015, 95,972 tonnes of cargo was reached, representing an increase of 13.5%.
The value from congested airport slot agreements has been a benefit of partnership thru IATA almost since its very beginning.
An optimized network is the prize for any airline that successfully negotiates slots at the semi-annual IATA Slots Conference, an event that goes back to the early history of the association.
Held in every June and November, the Slot Conference generally attracts nearly 1,000 delegates from over 270 airlines, and slot coordinators from more than 170 airports. The conference held in June deals with the forthcoming northern hemisphere winter schedules that are during the southern hemisphere’s summer. The November conference deals with the northern hemisphere summer schedules, which for the southern hemisphere is winter.
The process that determines who agrees to what slots during the conferences has been steered by IATA’s Worldwide Slot Guidelines (WSG) since it was first issued in 1976. Adherence to the WSG is the fairest way to balance the growth in air travel and restricted airport access. The guidelines emerged from a process to deal with congestion at a few major airports in the early 1960s and a need to reduce anticipated delays to an acceptable level more widely. The IATA member airlines and the community of airport coordinators from across the globe jointly produce the WSG. Another facet to the value gained by partnership thru IATA.
The WSG is now the industry standard recognized by most regulatory authorities for the management and allocation of airport capacity. In some instances, this text has been incorporated into local regulations and national law. Another example of incorporating the WSG is IATA’s work with Mexico’s General Directorate of Civil Aviation and the Mexico City Airport Group to ensure slots at Mexico City International Airport are optimized and best practices implemented in accordance with the guidelines.
Mexico’s Ministry of Communications and Transportation and IATA signed a Memorandum of Understanding in June, which includes the WSG slot assistance.
Sustainability of costs is securing landing and take-off slots with a price that makes the operation financially viable while transparency of allocation ensures slots are allocated to airlines and other aircraft operators in a neutral, transparent, and non-discriminatory way. The WSG states that the slot coordinators be functionally and financially independent of any single interested party. In the 1970s, a national carrier would be the coordinator for a nation’s hub and competitors had to inform that government airline about their schedules. The evolution of the slot process reflects the liberalization of the industry. Independent coordinators, acting as a go between for the slot allocations, became more common in the 1990s. It was in that decade that slot regulations also became supranational in nature with the EU adopting its own rules, which were subsequently amended in 2004 to better reflect the WSG. Partnership has driven this process bringing value thru a commonality of approach.
The EU has proposed changes to the ‘80-20 rule,’ so it becomes ‘85-15’. IATA opposed this, as an airline failing to operate no more than 15% of their allocated slots to their coordinated timings would likely be forced to fly empty aircraft when demand is not there. Using a slot 80% of the time should not mean that airlines lose it, or to be precise lose the historical precedence for those particular slots in the next equivalent season.
For the time being, the EU proposal is stuck in the rule making process because of member state differences. It is a debate that may return as much of Europe needs slot coordination because the continent has 97 of the world’s 170 fully slot-coordinated airports.
The decision to implement slot management at a given airport needs to be determined by the responsible regulatory authority following a thorough demand and capacity analysis and consultation with airlines and other stakeholders.
Airports level can change and the WSG provides guidance for the process that should be followed before the category alters. An important part of this process is the demand and capacity analysis. This can involve airspace and airport simulation software like the US Government’s Federal Aviation Administration’s Simmod or commercial applications such as Total AirportSim or Jeppesen’s Total Airspace and Airport Modeller. These types of software provide graphical representation of the airport and its traffic along with data analysis of aircraft travel times and delay statistics.
The number of slot-coordinated airports is expected to grow and IATA is working with the Malaysian, Colombian, and Brazilian governments to promote WSG policies and principles. The Chinese slot management system also needs to be more closely aligned with the WSG.
Whether it is a route on the top of the world or through a high population density area, carriers can swop slots. Slot leasing is another option for an airline that may wish to reduce its slot pairs for a temporary period. Slot coordination must not be a solution to the problem of airport capacity. It is only an interim solution to manage congested infrastructure until the longer-term solution of expanding airport capacity is implemented.
For the time being, airport coordination and Slots Conferences are essential for that value in network growth.•
Korean Air has finalized an order for 30 Boeing 737 MAXs and two 777-300ERs, with a list value of nearly $4 billion, firming up the commitment it made during the Paris Air Show in June.
Boeing said the total order could reach up to 52 aircraft, if Korean Air exercises the 20 737 MAX options which form part of the deal.
“I am confident these new airplanes will play an important role in Korean Air’s fleet modernization program for many years to come,” Boeing Commercial Airplanes president and CEO Ray Conner said.
The SkyTeam member operates a fleet of 166 aircraft, of which 91 are Boeing passenger variants, spanning 737s, 747s and 777s. It also operates an all-Boeing cargo fleet. With this latest order, Korean Air has 62 Boeing aircraft on backlog.
Korean Air’s aerospace division supplies the raked wing-tips on both the 747-8 and 787 programs. It is also one of the two suppliers of 737 MAX advanced-technology winglets.
Geneva - The International Air Transport Association (IATA) released data for global air freight markets showing very modest growth in September. Measured in Freight Tonne Kilometers, air cargo volumes rose 1.0% compared to the same month a year ago. This is a slight improvement on the August performance when volumes were broadly stable. Overall, however, air cargo volumes remain 1.2% down from their 2014 year-end peak.
The results varied widely by region. Carriers in the Middle East reported the most significant growth (7.5%) followed by European (2.8%) and African airlines (2.5%). Asia-Pacific based airlines recorded negligible growth (0.3%), and markets in North America (-3.3%) and Latin America (-6.4%) recorded declines. All regions reported capacity expansions ahead of growth in demand, taking the freight load factor down to the lowest level since 2009 (43.2%).
"Although slightly improved from August, the global trend is fragile, and the improvement
is narrowly based. The 2.8% growth reported by European carriers reflects positive trends in trade with Central and Eastern European economies as well as a general improvement in manufacturing in the Eurozone. But the largest air cargo region, Asia-Pacific, was only just in positive territory, held down by weak regional trade," said Tony Tyler, IATA’s Director General and CEO.
vs. Sep 2014
|FTK Growth||AFTK Growth||FLF|
|YTD 2015 vs.
|FTK Growth||AFTK Growth||FLF|
Regional analysis in detail
Asia-Pacific carriers saw a slight rise in FTKs of 0.3% in September compared to September 2014, and capacity expanded 2.1%. The contraction in Emerging Asia trade appears to have bottomed out, although China, Korea and Chinese Taipei, among other key economies, are suffering from poor trade growth.
European carriers reported a rise in demand in September of 2.8% compared to a year ago and capacity rose 7.7%. The European performance looks more impressive considering that volumes for the year to date have been flat. Improvements in Eurozone manufacturing activity and in trade to/from Central/Eastern Europe seem to be finally feeding through to support air freight demand.
North American airlines experienced a decline of 3.3% year-on-year and capacity grew 4.8%. Despite the poor year-over-year result, volumes in September were up 0.8% compared to August, indicating possibly that anticipated improvement in economic performance for the second half of the year may drive stronger air freight demand.
Middle Eastern carriers saw demand expand by 7.5%, and capacity rise 12.6%. Although once again the fastest growing region, the increase was 5.5 percentage points down on the average for the year to date. Major economies in the region have seen slowdowns in non-oil sectors, but growth rates remain robust enough to sustain solid demand for air cargo.
Latin American airlines reported a decline in demand of 6.4% year-on-year, and capacity expanded 2.1%. Worsening economic and political conditions in Brazil have led to regional trade activity falling 7% between July and August. Air cargo demand is down 6.8% for the year with no sign of improvement in the months to come.
African carriers experienced growth in demand of 2.5%, and capacity rose by 8.1%. Nigeria and South Africa, the largest economies in the region, have underperformed. Regional trade, however, has held up, and generated increases in air freight volumes.
Geneva - The International Air Transport Association (IATA) announced global passenger traffic results for September showing solid demand growth compared to September 2014 for domestic and international traffic.
Total revenue passenger kilometers (RPKs) rose 7.3% compared to the year-ago period, slightly above the 7.1% growth achieved in August. September capacity (available seat kilometers or ASKs) increased by 6.6%, and load factor rose 0.5 percentage points to 80.7%.
vs. Sep 2014
|RPK Growth||ASK Growth||PLF|
|YTD 2015 vs.
|RPK Growth||ASK Growth||PLF|
September international passenger demand rose 7.0% compared to September 2014, with
airlines in all regions recording growth. Total capacity climbed 6.9%, and load factor edged up 0.1 percentage points to 80.5%.
European carriers saw demand increase by 7.1%, supported by economic recovery in the region. Capacity climbed 6.6% and load factor rose 0.4 percentage points to 85.1%, highest among the regions.
Asia-Pacific airlines’ September traffic rose 6.8% compared to the year-ago period. Capacity increased 5.9% and load factor climbed 0.7 percentage points to 77.0%. The healthy performance occurred in spite of notable declines in trade activity in Emerging Asia as well as slower than expected growth in China.
North American airlines’ traffic climbed 4.1%, which was matched by a capacity expansion of 4.1%. As a result, load factor was flat at 82.4%. Expectations for better economic performance are supporting travel demand.
Middle East carriers had a 9.9% demand increase in September, well down on the 13.7% year-over year growth experienced in August, but still a very healthy result. Capacity rose 12.9% and load factor slipped 2.1 percentage points to 75.7%. Major economies in the region, including Saudi Arabia and the United Arab Emirates, have experienced slowdowns in non-oil sectors, however rates of growth remain robust.
Latin American airlines saw September traffic climb 7.9% compared to September 2014. Capacity increased by 8.5%, however, causing load factor to dip 0.5 percentage points to 80.0%. Despite recessionary conditions in Brazil and Argentina, solid international trade activity has provided a boost to business-related travel.
African airlines experienced their third consecutive month of positive traffic growth in
September, posting a 5.2% rise compared to a year ago. However, the result could be owing to volatility in reported volumes, as fundamental economic drivers remain weak. Capacity rose 3.5%, and load factor improved 1.2 percentage points to 71.6%.
Domestic travel demand rose 7.8% in September compared to September 2014. All arkets
except Brazil showed growth with the strongest increases occurring in India, China and Russia. Domestic capacity climbed 6.1%, and load factor improved 1.3 percentage points to 81.0%.
|Sep 2015 vs Sep
|RPK Growth||ASK Growth||PLF|
Brazil’s domestic demand slipped 1.3% in September compared to September 2014 as the economy slid further into recession with rising unemployment, and the Brazilian Real continued to decline against the dollar.
The Bottom Line : “Aviation’s connectivity is vital to the health and well-being of the global economy. And financial strength is critical to the industry delivering its best. While the overall outlook is for a collective profit that covers the industry’s cost of capital, parts of the industry are really struggling. The poor economic performance in Brazil is having a dramatic negative impact on the industry’s performance in Latin America’s largest market. There are a number of swift policy options that the government could take to stimulate the sector by reducing the burden of onerous taxes, punitive regulation and a crippling fuel pricing regime. A comprehensive policy response would unleash the power of aviation connectivity and pay big dividends across the economy. There is no time for complacency,” said Tyler.